Client Passed in 2018-Beneficiary as living trust-spouse had income option up to 5%-Spouse dies this year-Children Beneficiary
Client died in 2018. He had named his living trust as primary beneficiary with spouse having 5% income option for distribution. RMD’s had already started in 2018. Spouse now passes in 2022 and the two children are beneficiaries of the trust. Do the children have to take the balance of the IRA out by 2023 (5 years after date of original IRA owner’s death), or can they now take out over 10 years?
Permalink Submitted by Alan - IRA critic on Wed, 2022-11-09 15:18
Assuming the trust is qualified for look through, the trust is now subject to the 10 year rule, with annual life expectancy RMDs continuing to be distributed to the trust using the same RMD schedule that applied before spouse passed. The trust can accumulate the distributions or pass them through to the children depending on the terms of the trust.